General

Under Austrian Law, aviation is a federal matter governed by the Ministry of Transport, Innovation and Technology (Bundesministerium für Verkehr, Innovation und Technologie – BMVIT). The general Austrian act for aviation is the Austrian Aviation Act (Luftfahrtgesetz).

Any and all issues in relation to the operation of aircraft are handled by Austro Control GmbH, an entity owned by the Republic of Austria (www.austrocontrol.at).

Any matters in relation to air operator certificates are directly handled by the Ministry of Transport, Innovation and Technology (www.bmvit.gv.at/en/index.html).

In relation to passenger rights, airline liability and consumer matters, Austria is a party to the Montreal Convention and, as an EU Member State, is also bound to EU Regulation No. 261/2004 on airline passenger rights.

1.2 What are the steps which air carriers need to take in order to obtain an operating licence?

In order to obtain an operating licence, an air carrier needs to comply with EU Regulation No. 1008/2008, which entails the following:

Ownership requirement: in general, an operating licence will only be granted if the company is controlled and held by more than 50% of EU citizens; in addition, no managing director may have a criminal record.

Financial background: furthermore, proof of sufficient funds of the company is required. A business plan, including a liquidity plan for the first two years and a cash deposit in order to cover a three-month period of operation and all expenses of the company, must be submitted.

Insurance: the company must obtain insurance according to EU Regulation No. 785/2004.

Air Operator Certificate: the company must provide an AOC issued by Austro Control GmbH according to the five-step plan of EU Regulation No. 965/2012; this includes the certification of a flight operation manual for the intended aircraft operation and the appointment of the required post-holders.

Aircraft: lastly, all required technical and operational documents and certificates of the aircraft being operated must be submitted.

1.3 What are the principal pieces of legislation in your country which govern air safety, and who administers air safety?

Air safety is administered by the Ministry of Transport. Based on the Austrian Aviation Act, several regulations govern specific matters, such as the Air Operator Certificate Regulation (AOCV), the Rules of the Air (LVR), the Civil Aviation Personnel Licensing Regulation (ZLPV), the Civil Aircraft and Aeronautical Equipment Regulation (ZZLLV), and the Ordinance on Civil Airport Operations (ZFBO). All these matters are handled by Austro Control GmbH. Austro Control GmbH maintains a very well educated and trained team of specialists who are involved constantly in air operation matters, technical check-ups and licensing processes.

1.4 Is air safety regulated separately for commercial, cargo and private carriers?

The Austrian air safety system is the same for commercial, cargo and private carriers.

1.5 Are air charters regulated separately for commercial, cargo and private carriers?

No; however, different regulations apply for third country operations pursuant to the Austrian Federal Act on International Air Services.

1.6 As regards international air carriers operating in your country, are there any particular limitations to be aware of, in particular when compared with 'domestic' or local operators? By way of example only, restrictions and taxes which apply to international but not domestic carriers.

There are neither particular limitations for international operators nor any other additional tax or duty imposed on non-domestic carriers. The only difference between international and domestic routes concerns sale of tickets: domestic services are subject to VAT at 20%.

1.7 Are airports state or privately owned?

In Austria, both state-owned and privately owned airports exist. There is no legal requirement for the state to hold a minimum stake in airports. Vienna International Airport (VIE) is owned by a stock company listed on the Vienna Stock Exchange. Most regional airports are owned by the province or city in which they are located.

1.8 Do the airports impose requirements on carriers flying to and from the airports in your country?

In general, airports do not impose specific requirements on carriers. Requirements for specific Austrian airports are imposed by federal law and concern the impact of noise emissions on the environment. In addition, some airports, like Innsbruck (INN) in Tyrol, require special crew training of the pilots due to the location of the airport in the Alps and a difficult landing procedure.

Airports mostly grant a reduction of their fares and handling tariffs to new operators starting an operation at the airport. Such “welcome packages” depend on the type of aircraft and the frequency of the intended new service.

1.9 What legislative and/or regulatory regime applies to air accidents? For example, are there any particular rules, regulations, systems and procedures in place which need to be adhered to?

Austria has established the Federal Accident Investigation Agency, an agency reporting to the Ministry of Transport. Air accidents are handled pursuant to the Austrian Accident Investigation Act (Unfalluntersuchungsgesetz – UUG) and EU Regulations No. 56/9 and No. 996/2010. The duty of the Federal Accident Investigation Agency is to find out the cause of the accident and to publish such cause in its final investigation report. Such report shall be published no later than one year after the accident.

In addition, an accident causing personal damage or the death of a person will always be investigated by the Austrian prosecution department in accordance with the Austrian Criminal Act.

1.10 Have there been any recent cases of note or other notable developments in your country involving air operators and/or airports?

Yes, there have been two decisions by the Austrian High Court recently that will have an impact on air operators.

Compensation for delays: an Austrian court was the initiator of the decision of the European Court of Justice (04.09.2014 – C-452/13) regarding the decisive moment of a delayed flight in respect of the time of a delay. According to the court, a flight does not end on its “touch-down” or “block-on” time; the time when the doors are opened for de-boarding is the relevant moment. This decision will now bring quite a lot of confusion to airlines in respect of EC Regulation No. 261/2004, and in respect of compensation payments: pursuant the EC Regulation, passengers are entitled to cash compensation in the amount of €250.00 to €600.00 if a flight is delayed by more than two or three hours. This delay was always based on the published “block-off” and “block-on” times; if the “block-on” time is now 1:58 hours after “block-off”, the determination of the time when the doors were opened will decide on the payment of compensation to passengers, but will be difficult to evidence.

Sale of round-trip tickets: in February 2013 the Austrian Supreme Court decided that both legs of a round-trip ticket can be used without any additional payments, even if one leg was not used. All round-trip tickets include the rule that the legs must be flown as shown and that the return leg will be cancelled if the outbound flight was not consumed. This clause was declared null and void by the Austrian Supreme Court. This will now have an impact on standard air carriers selling special round-trip fares much more cheaply than one-way tickets.

Aircraft Trading, Finance and Leasing

2.1 Does registration of ownership in the aircraft register constitute proof of ownership?

No, the Austrian aircraft register is only a federal register and does not constitute proof of ownership.

2.2 Is there a register of aircraft mortgages and charges? Broadly speaking, what are the rules around the operation of this register?

An aircraft mortgage register does not exist under Austrian law. The aircraft register is only a federal register where the operator and all relevant operational issues are registered. It is not possible to register mortgages, unpaid charges or other legal interest in respect of aircraft.

2.3 Are there any particular regulatory requirements which a lessor or a financier needs to be aware of as regards aircraft operation?

Lessors and financiers need to be aware that no mortgage register exists in Austria and that neither the lessor nor the owner or financier of an aircraft can be registered in the aircraft register.

2.4 Is your country a signatory to the main international Conventions (Montreal, Geneva and Cape Town)?

The Montreal Convention was ratified by Austria in 2004. Austria has also ratified the Geneva Conventions. Austria has not yet ratified the Cape Town Convention or the Rome Convention.

2.5 How are the Conventions applied in your country?

The Montreal Convention is directly applied without any additional national act. It has the same status as an Austrian act and priority over the Austrian Aviation Act.

Litigation and Dispute Resolution

3.1 What rights of detention are available in relation to aircraft and unpaid debts?

Rights of detention

Rights of detention in an aircraft may exist with respect to claims for compensation arising out of work carried out on, expenses made with respect to, or damages caused by, an aircraft (section 471 Civil Code; ABGB or section 369 of the Commercial Code, UGB). Such a right of detention only exists between the creditor and the debtor, however generally not between the creditor and third parties. With respect to the aircraft, this means the following:

The aircraft is owned by the owner but operated by the airline. Therefore, the creditor will not acquire a right of detention against the owner or the lessor or a security agent, if the debt is incurred by the airline. In general, only the operator is party to the maintenance contract. However, the Austrian Supreme Court had stated in a decision in 1996 that a creditor may acquire a right of detention against the owner of a leased asset if he has agreed and the lessee has undertaken to carry out the respective repair work in the lease contract. The Supreme Court stated that the lessee’s responsibility to carry out the maintenance could be deemed as an authorisation to conclude such contracts on his behalf and that therefore the owner would become liable to pay the costs. The Austrian Supreme Court further stated that by repairing the aircraft, the owner is also released from a duty and the value of the aircraft increases. Therefore such claim against the owners may be justified. However, such claim is only possible if the main contract partner of the maintenance agreement is in default under the maintenance contract. A direct claim against the owner of an aircraft is not possible since contractual agreements have priority.

In respect of fees in connection with the operation of the aircraft

Basically, the party liable to pay all relevant operational charges is the operator of the aircraft, therefore the airline. Only in the event that the identity of the aircraft’s operator is unknown and the owner fails to prove that another party is the operator of the aircraft will the owner of the aircraft be deemed to be the operator and liable to pay these charges. In the case of non-payment, Austro Control or the Austrian airports would have to file an action against the operator with the competent courts. A judgment could be enforced against all properties of the operator and a lien will be attached to all assets. Please note that such lien may only be created with respect to assets owned by the debtor against whom the judgment has been rendered, and that any contractual lien which was created prior to such court order will rank ahead. Since a leased aircraft is not owned by the airline, it cannot be subjected to such liens deriving from unpaid airport or air traffic charges. In any event, it is not possible to detain an aircraft for unpaid air navigation charges. The laws of Austria do not provide for any liability of the aircraft for the crew’s wages or salvage.

3.2 Is there a regime of self-help available to a lessor or a financier of aircraft if it needs to reacquire possession of the aircraft or enforce any of its rights under the lease/finance agreement?

Under Austrian law, the owner of an aircraft can get access to his property in case of a default under the mutual agreements entered into.

Austro Control GmbH does not require the consent of the operator in order to deregister an aircraft from the aircraft register. Therefore a deregistration is possible upon the owner’s request without the operator’s consent.

In case of the realisation of a pledge granted over an aircraft, the standard court proceedings need to be observed; it is possible to agree on a free sale in the pledge agreement under certain circumstances and provisions.

In case of insolvency, special rules apply pursuant to which an airline being bankrupt may be granted a 90-day period in order to determine whether to return a leased aircraft or continue the lease. During these 90 days, return of the aircraft is blocked.

3.3 Which courts are appropriate for aviation disputes? Does this depend on the value of the dispute? For example, is there a distinction in your country regarding the courts in which civil and criminal cases are brought?

In Austria, civil matters and criminal matters are handled by different courts. For civil matters the competent court for disputes depends on (i) the value of the claim, (ii) whether the content of the claim is “private” or “commercial”, and (iii) the principal place of business of the defendant. In general, an aviation dispute is a commercial dispute and therefore the following courts would be competent:

In 2015: a district court for claims of a value up to a total amount of €20,000.00; or the competent regional court for claims of a higher value.

In 2016: a district court for claims of a value up to a total amount of €25,000.00; or the competent regional court for claims of a higher value.

3.4 What service requirements apply for the service of court proceedings, and do these differ for domestic airlines/parties and non-domestic airlines/parties?

Under Austrian law, a “service of process agent” does not exist. In case of court proceedings documents are delivered according to the Austrian Service of Documents Act (Zustellgesetz). On case of a dispute with a company, the court itself delivers the claim to the defendant by registered mail to the registered address of the defendant that is registered in the company register. In case of a claim against a natural person, the plaintiff has access to the general registration register of the Republic of Austria, where every person living in Austria should be registered. If the registered mail was sent to either of such registered addresses, it does not need to be picked up. Post officers must leave a notification letter at the door of the defendant. The claim will be deposited at the local post office if it cannot be delivered and is automatically deemed to be delivered as of the day, the first attempt to deliver was made.

There are no special proceedings for domestic airlines. The Act on the service of court documents applies to any and all legal proceedings in Austria.

3.5 What type of remedies are available from the courts or arbitral tribunals in your country, both on an i) interim and a ii) final basis?

Interim remedies: under Austrian law the instrument of injunction exists for interim remedies. When filing an injunction, an immediate direct damage, and the fact that standard court procedures would fail to avoid such damage or its enforcement, must be proven in order to be successful. Injunctions are released for a specific period of time and must be followed by a standard claim where the entire matter will be looked at in detail. Injunctions have very short terms for both the court to react and the defendant to submit a reply (in general, 14 days). Injunctions do not comprise a detailed procedure of proof; this is based on the attestation of a possible damage that requires immediate action.

Standard legal proceedings require the filing of a claim, and the payment of an initial court fee which will depend on the value of the claim and will amount to around 1.5% of the claim. Before starting legal proceedings the written claim is sent to the defendant, who is given a four-week period to file a statement of reply. After having received such statement, the court arranges a first hearing. In general, such first hearing takes place three to four months after the filing of the claim. The average time taken within legal proceedings to obtain the first judgment is 15 months.

Furthermore, the parties in a lawsuit are entitled to reimbursement of their legal fees by the defeated party. The legal fees that must be reimbursed are limited by the official tariffs of the Austrian Act on Lawyer’s Fees (RATG), and also depend on the value of the claim.

For arbitral proceedings, Austrian law also provides for special interim remedies in order to secure the enforcement of a claim.

3.6 Are there any rights of appeal to the courts from the decision of a court or arbitral tribunal, and, if so, in what circumstances do these rights arise?

Under Austrian law an appeal can be filed against any kind of judgment. For “small claims” (of a value lower than €2,700.00), certain restrictions apply.

The respective court of appeal will render its decision based on the facts determined by the court of first instance. Under Austrian law the submission of additional evidence is prohibited.

A further appeal to the Austrian Supreme Court can be filed against the decision of the court of appeal if the matter has not yet been decided by the Austrian Supreme Court or if the matter decided may have general legal consequences and contains legal matters going beyond the specific case being decided.

A standard appeal against arbitral awards is not possible under Austrian law. The only exceptions are if the matter decided was a matter which was not arbitrable, or if the arbitral award is against ordre public.

Commercial and Regulatory

4.1 How does your country approach and regulate joint ventures between airline competitors?

In Austria, joint ventures between airline competitors are subject to the general principles and regulations in respect of unfair competition and merger control. Such joint ventures will therefore be qualified according to EU Regulation No. 411/2004 and the Austrian Act Against Unfair Competition (UWG).

Applications must be filed with the Austrian Independent Federal Competition Agency (Bundeswettbewerbsbehörde).

The Republic of Austria is represented by its federal antitrust prosecutor who is an official party to all antitrust proceedings by statutory provision.

4.2 How do the competition authorities in your country determine the "relevant market" for the purposes of mergers and acquisitions?

In respect of air carriers, the “relevant market” is determined by:

the relevant routes flown;

the type of aircraft used; and

the frequency with which such routes are flown.

In addition, the geographical radius of the departure and landing airport is taken into consideration: for regional airports the radius is about 100 kilometres; for international airports 300 kilometres.

4.3 Does your country have a notification system whereby parties to an agreement can obtain regulatory clearance/anti-trust immunity from regulatory agencies?

Pursuant to the antitrust regulations under Austrian law, the parties to an agreement have to determine whether its content is subject to approval by the antitrust authorities. A specific system pursuant to which an agency decides or declares whether an agreement is subject to approval or not, does not exist.

However, the Austrian antitrust authorities offer to discuss merger projects prior to their implementation in order to share the view of the authority with the parties.

4.4 How does your country approach mergers, acquisition mergers and full-function joint ventures?

In general, an acquisition of more than 25% of a competitor, or the taking over of its control, is subject to the merger control provisions if the involved parties have more than a 10% market control of the relevant market. This means that the intended merger or acquisition must be registered with the Austrian Independent Federal Competition Agency.

In addition, certain key turnover figures must be met in order to fall under the Austrian antitrust regulations:

The worldwide turnover of all involved parties is higher than €300 million.

The combined Austrian turnover of all involved parties is higher than €30 million.

The worldwide turnover of at least two involved parties is higher than €5 million each.

4.5 Details of the procedure, including time frames for clearance and any costs of notifications.

The intended merger must be registered with the Austrian Independent Federal Competition Agency (“Antitrust Agency”). Within four weeks of the date of registration, the Antitrust Agency itself or the federal antitrust prosecutor has the right to request a detailed audit of the merger. If no audit is requested, a clearance notification is rendered. This four-week period may be shortened if both the Antitrust Agency and the federal antitrust Prosecutor waive their right to request an audit.

If an audit is requested, the merger will be published and every competitor may submit its concerns regarding the intended merger.

The Antitrust Agency must render a decision within five months of the date of registration. The decision of the Antitrust Agency can be appealed. The decision of the court of appeal is final.

For the filing of a merger registration, a lump sum in the amount of €1,500.00 must be paid. In case of an audit, the Antitrust Agency may impose a fee of up to €34,000.00 depending on the complexity and expenditure of each case.

4.6 Are there any sector-specific rules which govern the aviation sector in relation to financial support for air operators and airports, including (without limitation) state aid?

Under Austrian law, no sector-specific rules for the aviation sector exist. Financial support by the state is, in general, not allowed and is subject to approval by the European Community.

4.7 Are state subsidies available in respect of particular routes? What criteria apply to obtaining these subsidies?

In Austria no specific route is under state subsidy. State subsidies would only be available if such route has a certain need for a public service obligation to be performed by the air service due to its geographical exposure.

4.8 What are the main regulatory instruments governing the acquisition, retention and use of passenger data, and what rights do passengers have in respect of their data which is held by airlines?

Under Austrian law, any and all passenger data is protected by the Austrian Data Privacy Act of 2000. In addition, certain bilateral or EU agreements with the United States or Canada provide for the disclosure of certain information on the passengers and for such information to be kept by the airline.

Pursuant to the Austrian Data Privacy Act, an airline must not disclose to third parties, other than the passenger, any of the passenger’s information, nor the fact of whether the passenger is on board a flight or not.

Passengers themselves may request any information on the data kept at any time.

4.9 In the event of a data loss by a carrier, what obligations are there on the airline which has lost the data and are there any applicable sanctions?

The Austrian Data Privacy Act does not provide for a particular sanction in case of data loss by an air carrier. The general Austrian principles on indemnification of damages caused apply. Such damages could be the re-booking fees and hotel costs if, due to loss of data, the immigration authorities delay the immigration, resulting in the loss of a connecting flight.

Punitive damages in general, and in particular those imposed on air carriers for losing data, do not exist under Austrian law.

4.10 What are the mechanisms available for the protection of intellectual property (e.g. trademarks) and other assets and data of a proprietary nature?

Trademarks can be registered in the Austrian trademark register. The competent authority is the Austrian Patent Agency, which is also competent for the registration of patents and designs. The registration can be filed online using a smartcard from the European Patent Office (www.epo.org). The date of registration in Austria can be used as the date for international intellectual property rights to be registered with the World Intellectual Property Organization (WIPO) (www.wipo.int).

The costs for the registration of a trademark in Austria are between €250.00 and €5,000.00 depending on the term of the requested protection.

4.11 Is there any legislation governing the denial of boarding rights?

In Austria, EU Regulation No. 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, is the relevant legislation for denial of boarding.

If boarding is denied to passengers against their will, the operating air carrier must compensate them as follows:

€250.00 for all flights of 1,500 kilometres or less;

€400.00 for all intra-Community flights of more than 1,500 kilometres, and for all other flights of between 1,500 and 3,500 kilometres;

€600.00 for all flights not falling under (a) or (b).

In addition, they are entitled to assistance and reimbursement of any and all expenses caused by the denied boarding, in accordance with Articles 8 and 9 of EU Regulation No. 261/2004.

4.12 What powers do the relevant authorities have in relation to the late arrival and departure of flights?

In general, an authority has no direct power in relation to the late arrival and departure of flights. Austria is obligated to ensure general compliance with all applicable laws on the part of their air carriers, and this includes EU Regulation No. 261/2004 and the payment of the compensation referred to therein. Austria has therefore established an independent arbitration court at the Ministry of Transport in order to assist passengers claiming compensation under EU Regulation No. 261/2004.

If an air carrier constantly fails to comply with its obligation, a penalty pursuant to § 169 of the Austrian Aviation Act could be imposed. Such penalty could be a maximum of €22,000.00.

4.13 Are the airport authorities governed by particular legislation? If so, what obligations, broadly speaking, are imposed on the airport authorities?

Based on the Austrian Aviation Act, every airport is obliged to publish general conditions of use to guarantee that an operation is in line with all applicable laws, including airport charges, according to EU Regulation No. 2009/12. Such general conditions of use must be approved by the Ministry of Transport.

For ground handling services, the Austrian Airport Ground Handling Act is applicable. This was implemented to ensure the liberalisation of ground handling services in Austria, and guarantees free access to this market for private ground handling companies.

4.14 To what extent does general consumer protection legislation apply to the relationship between the airport operator and the passenger?

The Austrian Consumer Protection Act does not deal directly with the relationship between the airport operator and the passenger. In general, the only contractual relationships protected are those between passengers and their direct contracting partners, namely:

the airline;

the travel agency; or

the agency where the respective service was bought.

Any claim based on a damage caused by the airport operator (loss of baggage, delays to a flight due to lack of ground handling staff, etc.) must therefore be claimed with the passenger’s contracting party and they may take recourse internally, if applicable.

In Future

5.1 In your opinion, which pending legislative or regulatory changes (if any) or potential developments affecting the aviation industry more generally in your country are likely to feature or be worthy of attention in the next two years or so?

In general, the Customer Protection Act will be the most changing area of legislation in aviation in the next two years. Airlines will need to be much more transparent than today, not only in respect of compensation for delays or denied boarding, but also with regard to pricing. More transparency will be required around hidden fees, cancellation policies and “special offers” in airlines’ publications, and fewer additional fees will be added at the end of an online booking.

In respect of aircraft financing, the question of a pledge register will continue to be discussed, and will hopefully be put in place one day. The lack of possibility for lessors or financing banks to register their interests in an aircraft in a state register is one of the most difficult burdens for aircraft financing in Austria, and makes finance transactions very difficult and complicated.